Nilesh Shah Says Rate Cut Likely To Begin In 2025 As RBI Has 'Luxury To Play On Backfoot'

The rate cut cycle in India is bound to begin in 2025 as the central bank has a "luxury to play on the backfoot" given the economic tailwinds, said Nilesh Shah.

"The Reserve Bank of India is in an envious position," according to the managing director of Kotak Mutual Fund. Some batsmen have to play on the front foot. However, some have the luxury to play on the backfoot because their reflexes are good, Shah said drawing parallels to cricket.

Growth is fastest among the peer group. Inflation is below the RBI mid-target range. The rupee is stable. And, the expected inflation is likely to be stable, Shah said. "In scenarios like this when everything is in your favour. Why repair something which ain't broken?"

The RBI does not have to follow the Fed rate cut cycle as the US economy was propped up by a high fiscal deficit and slowing down, he said.

"RBI has all the options open and they will probably play little late rather than little early." He does not expect rate cuts in this calendar year.

The Securities and Exchange Board of India cannot guarantee that everyone can make money while trading in the derivatives space, Shah said.

There should be some conditions as to who can participate, how much learning they have about futures and options and how much leverage they have, he said. "It is not that people lose money in stock market. It is the trader who loses money and investors who make money."

"As a society, there is a warning that cigarette smoking is injurious to health while buying tobacco. And same standard should be applied for people who want to participate in F&O," Shah said.

The market regulator must have the discretion to what appropriate safe guard can be built for participation in futures and options, he added.